Supercede: Subpar cedant data translates to ~10% reinsurance rate hikes

Ambiguous or inconsistent cedant data has forced reinsurers to impose a “data distrust tax”, which often translates to a 10 percent increase in reinsurance rates, according to reinsurance technology platform Supercede.

This finding was revealed in a Supercede white paper, seen by The Insurer, written with input from reinsurance underwriters, actuaries and brokers.

The white paper outlined that subpar data was not just an inconvenience to the industry, but also a financial drain.

Supercede said cedants are not only penalised through higher reinsurance costs, but also through diminished capacity and missed avenues for innovation.

The white paper found that underwriters were prone to withhold capacity from parties it was cumbersome to deal with.

Input from industry executives also emphasised that cedants that deliver patchy data sets are frequently sidelined from bespoke evaluations, and instead lumped into portfolio generalisations.

In a statement, Ben Rose, president of Supercede, explained: “Poor data not only pushes prices higher and drives away capacity; it undermines virtually every effort to build stronger relationships, to become more efficient, and to get solid outcomes from reinsurance placements.”

Supercede’s report found that one consistent theme across its interviewees was the desire to see improvements in the standard of submission data.

One respondent, Axa XL’s reinsurance CUO Jonathan Gale, reiterated this sentiment, saying that “uncertainty loads” were often added to premiums in order to mitigate the risks associated with poor cedant data.

“We want to be in a position to reward cedants for providing us with good data in our pricing; unfortunately, at the moment, we often have to include uncertainty loads for poor or incomplete data.”

Cedant beauty contest

Supercede’s white paper said the bar for data quality is rising as reinsurers are increasingly keen to invest in modernised portfolio management tools.

This rise has been accompanied by many cedants and brokers adopting new software which has driven a noticeable uptick in submission quality.

However, the quality of submission data was said to vary widely across the market, with variation even within the same regions and lines of business.

The improvement in data quality in some areas and raised expectations from reinsurers means an unwelcome spotlight is shone on inadequate data sets.

Supercede said this has created a cedant beauty contest which “only certain players are ready for”.

This contest is increasingly important in a market that one responded was “the most challenging in a generation” after 2023 renewals.

Joe Monaghan, global growth leader at Aon, underlined that “successfully navigating such a market requires preparation and high-quality data”.

The white paper — titled The Reinsurance Data Crisis — includes further analysis and insight into (re)insurance data practices. It can be downloaded here.